The deadline for
Citizens Property Insurance Corp. to respond to
state regulators over a new homeowners policy came and
went Monday, but little was resolved in the dispute over
the rates for the new policy.

Known as HO-8, the new policy option is a stripped-down
version of the standard homeowners’ policy, and doesn’t
cover water leaks or falling objects. Typical HO-8
policies in the private market pay only actual cash
value for the structure of the home, but the new
Citizens HO-8 policy would have the option of
replacement cost value for claims.

Lawmakers inserted a provision into HB 1101
this year declaring Citizens must offer the HO-8 policy
by Jan. 1.

Citizens board members, though, don’t want to offer the
policy at all, and especially not for the statewide
average 28 percent less than the standard homeowner
policy, which regulators prefer. Citizens originally
filed the HO-8 policy at 7 percent less than the
standard policy. The filing was based on what Citizens
considers actuarially sound rates -- what the rates
would be in the private market -- but regulators think
the HO-8 policy should be based on the same 10 percent
annual rate increase cap that applies to standard
policies. Regulators also point out that should they
approve Citizens initial filing, the HO-8 policy with
less coverage would cost more than the standard
multi-peril policy in some areas of the state.

Citizens, a state-run company with 1.47 million
policies, has been trying to reduce its risk and the
potential assessments to all policyholders, often in
ways that have upset consumers: reducing or eliminating
coverage without a drop in premium, pedantic inspections
of wind mitigation credits, and pushing for optional
sinkhole coverage. Its board members are worried
consumers will gravitate toward a cheaper policy with
inadequate coverage.

The Citizens board directed its staff to continue
negotiations with the Office of Insurance
Regulation, but told them to withdraw the
filing if regulators did not agree to a “reasonable”
rate.

But Rep. Mike Fasano, R-New Port
Richey, said the Legislature simply wants Citizens to
offer a choice to consumers who otherwise can’t afford
the standard policy. He thinks OIR should threaten legal
action to enforce the statute if Citizens refuses to
offer the policy.

“The statute is clear that they’re going to offer the
new policy and give homeowners a choice,” Fasano said.
“OIR should be the one that enforces it and if they
don’t, they should take them to court.”

OIR officials did not answer emailed questions or
respond to calls Monday, but a spokeswoman stated talks
with Citizens are ongoing.

Fasano said Citizens is putting the goal of reducing its
exposure before everything else, at the direction of
Gov. Rick Scott, who has advocated for
shrinking Citizens.

“The problem with Citizens is they’re getting their
marching orders from the governor and his administration
to keep people out of Citizens at all costs,” Fasano
said.

Other consumer advocates, however, are skeptical of the
HO-8 policy. Jay Neal, executive
director for the Florida Association for
Insurance Reform wrote a letter to
Insurance Commissioner Kevin McCarty asking him
to approve Citizens’ original rate filing.
Insurance Consumer Advocate Robin Westcott is
concerned homeowners will not be aware of the stripped
down coverage in the new policy until it is too late.

“Unfortunately, my experience has been people don’t
understand the difference until it’s time to actually
pay the claim,” Westcott said.